Treasurer Josh Frydenberg has warned businesses not to raise prices too much in response to the rising cost of living.

On Monday, both Woolworths and Coles left the door open to rejecting SPC’s plan to increase the prices of its products by up to 20 percent.

While acknowledging that the rising cost of living would impact consumers, Mr Frydenberg warned against companies taking advantage of the situation.

Unleaded petrol prices have risen to around $2.20 a litre in recent days, with analysts warning that they could reach a peak of around $2.50 in the coming weeks.

As the cost of living rises, the government is doing what it can to support households, including through tax cuts.

The chief executive of SPC, sent letters to all of the supermarkets last week informing them of his plans to increase the prices of about 100 household staples by 20 percent due to the rising cost of living.

Both Woolworths and Coles declined to comment on the details of SPC’s proposal, but both indicated that they could reject the increase on reasonableness grounds.

Since the supermarkets were aware of the company’s plans, they have 30 days to accept or reject the proposed increases.

Analysts said that the prices of some products could increase by up to 10 percent. They also predicted that inflation would reach around 3 percent to 4 percent.

Despite the rise in food prices, non-food retailers have rarely seen inflation of this magnitude, Giles noted.

With inflation expected to increase, analysts believe that it would be positive for retailers’ sales growth in the year ahead.

The cost of raw materials such as sugar, oil, and wheat have increased significantly in the past 12 months. This is threatening the profitability of many companies that make popular products such as Tim Tams and Shapes.

A spokesperson for the major retailers noted that they have a process in place to review the prices submitted by their suppliers.

Although Coles would not reveal how much it would be willing to spend on major price increases, it indicated that the company would consider the increases on a case-by-case basis.

The rising prices over the next couple of years are expected to reflect the high level of savings and healthy incomes of Australian households.

Prices are also trending higher with insurance with recent weather extremes causing widespread damage resulting in huge insurance claims. With this, you can still get cheap Insurance from Woolworths Insurance and using a Everyday Insurance promo code.

With inflation expected to increase consumers would start shifting their spending to cheaper brands and private labels. The rising prices could affect consumer spending by around 6.8 percent. This could lead to more competition in the market.